Leading wind development and turbine suppliers, including South Korea's Good PM Group, Denmark's Vestas and France's Vergnet, are flocking to East Africa to take advantage of new or revised public/private partnership (PPP) investment policies being pursued by some countries in the region.

Governments are looking to PPPs to overcome the barriers of inadequate
financing brought about by unmet tax collection targets and gaps in
technical knowledge in their quest to harness renewable energy sources.
Kenya, Ethiopia and Tanzania have embraced or shown commitment to PPPs
at a high level despite a cumbersome legislative process that has
constrained opportunities in renewable energy. All three have sought
financial support from lending institutions including the World Bank,
African Development Bank and development partners, resulting in
financial deals worth more than $400 million. Private companies
have invested in 570MW of wind in the three countries.

Kenya

Kenya, with a potential to generate 30GW from wind power, has developed
a draft policy - the public-sector stakeholder partnership policy (PSSP)
- that would guide how the government should engage with stakeholders in
wind and other sectors.

"The PSSP will guide the development of policy frameworks in
collaboration with stakeholders and in reviewing existing laws to enable
partnerships," says a briefing from the prime minister's office, which
is spearheading the PPP initiative.

In June, the Kenyan government promised to address the problem of the
lengthy bureaucratic process that private investors are forced to
undergo before they are licensed to set up a business in renewable
energy. "The government will encourage through PPP the development of
alternative energy sources, and the ministry of finance will commit
itself to support the ministry of energy to ensure all procedural and
licensing impediments are removed so that private investment in the
energy sector can be fast-tracked," says finance minister Uhuru
Kenyatta.

The Lake Turkana Wind Power consortium announced financial closure in
July for the 300MW capacity $625 million wind farm project in the
northern part of the country after the African Development Bank said it
will provide 30% of the total project cost.

Majority shareholder Aldwych International offered 50% of the wind
farm's total cost, with South Africa's state-owned Industrial
Development Corporation and Dutch wind developer KP&P providing the
balance.

Ethiopia

In Ethiopia, prime minister Meles Zenawi has promised that the country,
where only 11.6% of the population has access to electricity, would
remove barriers to increasing investments in renewable energy.

Zenawi has already told the country's parliament that it will adopt
policy proposals by the Ethiopian Economic Association (EEA) on scaling
up investments in renewable energy, including allowing private investors
to inject cash into additional wind turbines.

"High upfront cost, lack of market infrastructure and after-sales
maintenance, and absence of promotion strategy are the major barriers
for dissemination of renewable energy technology in Ethiopia," says
Mekonnen Kassa, an economist at the EEA.

"In addition, the government has to allow the private investor to be
engaged actively in energy generation," says Mengistu Tefera, another
EEA economist. "The current sole power supplier of the country, the
Ethiopian Electric Power Corporation, needs to be as efficient as any
other profit-making private company to serve its customers."

Germany corporate finance firm Deutsche Unternehmensfinanzierung has
already promised to partner with Ethiopia to raise $120 million
for the construction of the Aysha wind farm as part of a long-term
strategy to increase the country's wind capacity to 720MW by 2013.

Ethiopia is building a $292 million, 120MW wind farm at Ashegoda
in partnership with French turbine maker Vergnet.

Tanzania

Development firm Wind East Africa is teaming up with Tanzania's ministry
of minerals and energy to develop a $113 million wind project in
the country's central region. This will add 50MW to the national
grid.

Another promising partnership is that of South Korea's Good PM Group, a
developer, with Tanzania's Power Pool East Africa (PPEA). The two have
signed a deal to put up a 210MW project in the Singida region at a cost
of $400 million. The Koreans have already signed a memorandum of
understanding with PPEA to acquire 500 hectares of land for the
project.

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